The Mamata Banerjee government in West Bengal is sinking deeper into a financial mess. The state?s finances are in such a precarious situation that after meeting revenue expenditure like salaries, pensions and interest payouts, the exchequer is left with close to nothing to fund welfare and development programmes. The state is required to spend from its own pockets to be eligible to get funds from the Centre for the latter?s flagship programmes, but in the current situation the state administration is at its wit?s end on how to generate these resources.

Since the release of the R18,908-crore special package by the Centre (which includes a matching contribution of R10,158 crore and R8,750 crore for backward area development) is stuck, the state has now come out with a formula: The Centre should release an advance of R5,300 crore from the package without insisting on matching contribution at this stage. In parallel, the state will attempt to cut down on spending on salaries, stipends and pensions to R2,700-2,800 crore per month.

According to sources, this week the state sent an SOS to the Centre to release the advance payment of R5,300 crore so that it can launch development programmes under various central schemes and then get a matching grant from the Centre.

The government accounts are divided into three funds ? consolidated fund, contingency fund and public accounts. But all expenditure has to be made from the consolidated fund, which is created out of tax revenue, non-tax revenue grants, capital gains and loans. Now the state has no more opportunity to take loans, while capital gains have absolutely halted.

Currently, the state has to make do with only Rs 4,250- 4,400 crore to spend on general services, social services, economic services (salaries, bills, pension and stipends), debt services, advances, grants, inter-state settlement and appropriation of contingency fund.

If the government spend is restricted to only salaries, pensions and stipends, it will have roughly R1,200-1,400 crore for planned expenditure. Getting the central grant is essential, with which it could make capital investment to enhance its revenue base, the official said, adding that diverting funds from public accounts would involve high risks since it comprises small savings, provident fund and the remittance cash balance.

There is almost nothing left in the contingency fund, according to sources.

In fact, the state would require to create a capital base for revenue growth. The 15% revenue growth, as finance minister Amit Mitra claims, has come from stopping leakages, which has taken the state’s monthly income (from tax and non-tax revenues) to Rs 4,200- 4,400 crore from a level of Rs 3,700-3,800 crore at around the same period last year. The Left Front government had diverted money from capital expenditure funds to fill the gap of salary bills but this government has no such scope. The increase in revenue also has a component of non- tax revenue, which has also gone up. So the exact tax revenue growth is hard to estimate.

But considering the little revenue growth the state has achieved, the present government has covered the gap for expenses on account of salaries, pensions, stipends and interest payout. But this revenue receipt also has a component of VAT refund, which if taken into account would again put the government short of income than its economic expenditure to which it was currently sticking, the official said.

To follow the Centre’s guideline, which asks the state to mop up additional revenue, the state needs the grants from the Centre, which has been halted, the official said.